Tags: Business Equipment | spending | durable goods | economy

Business-Spending Index Surges as Durable Goods Orders Soar

Image: Business-Spending Index Surges as Durable Goods Orders Soar
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Wednesday, 25 Nov 2015 08:54 AM

A gauge of U.S. business investment plans surged in October, the latest suggestion that the worst of the drag from a strong dollar and deep spending cuts by energy firms was over.

The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.3 percent last month after an upwardly revised 0.4 percent rise in September.

Economists polled by Reuters had forecast these so-called core capital goods orders rising only 0.4 percent after September's previously reported 0.1 percent dip.

The report came on the heels of data this month showing a solid increase in manufacturing output in October. A survey of factories also showed a rise in new orders last month.

Manufacturing, which accounts for 12 percent of the economy, has been slammed by the dollar strength and the spending cuts in the energy sector. The dollar has appreciated 18.1 percent against the currencies of the United States' main trading partners since June 2014.

The pace of appreciation, however, is gradually slowing. Economists also believe that the bulk of spending cuts by oil field firms like Schlumberger in response to lower crude prices have already been implemented.

Still, manufacturing has to deal with an inventory overhang. Data on Tuesday showed businesses had not been as aggressive as initially thought in their efforts to reduce unsold merchandise, leading to an accumulation of inventories that economists said was unsustainable.

Shipments of core capital goods, which are used to calculate equipment spending in the government's gross domestic product measurement, fell 0.4 percent last month after an upwardly revised 0.7 percent gain in September.

Core capital goods shipments were previously reported to have risen 0.5 percent in September.

An 8.0 percent jump in transportation equipment spending also contributed to lifting overall orders for durable goods — items ranging from toasters to aircraft that are meant to last three years or more — which surged 3.0 percent last month.

Transportation was buoyed by an 81.0 percent increase in aircraft orders. Boeing reported on its website that it had received 59 orders last month, up from 29 aircraft orders in September. Orders for automobiles and parts fell 2.9 percent.

© 2017 Thomson/Reuters. All rights reserved.

   
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Economy
A gauge of U.S. business investment plans surged in October, the latest suggestion that the worst of the drag from a strong dollar and deep spending cuts by energy firms was over.
Business Equipment, spending, durable goods, economy
361
2015-54-25
Wednesday, 25 Nov 2015 08:54 AM
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